Excessive use of nitrogen fertilizer in crop production in China leads to environmental problems, and farmers’ lack of knowledge is the primary constraint. The public extension system, however, lacks the accountability and capability to deliver ecoagricultural extension services to farmers. Previous studies show that extension staff had little incentive to deliver extension services because they were overwhelmed by assigned non-extension activities. By applying a combined incentive scheme of cash rewards and political motivation on extension agents from 2009 to 2010, we found that knowledge training effectively reduced nitrogen use by 7% with no impact on yields in wheat production in two locations in Shandong Province, a major grain production region in north China. As such, improving nitrogen management has a great potential for a low-carbon agriculture in China and should be included into the extension program. However, the effectiveness of the training depends largely on the institutional capacity of the local extension system, which varies by region. In counties where extension employees were overwhelmed by assisting township administrations, a pure economic incentive without a long-term commitment was not effective. In the future, China faces challenges with delivering low carbon technologies through the existing agricultural extension system.